Pricing Frequency Restrictions Curb the Initiation of Collusion with Ralph-C Bayer (submitted)
We experimentally test the impact of pricing-frequency restrictions on the price level in a 60 minute, real-time duopoly market. Our unregulated market allows for price changes at any time. We compare this to a real-time market where currently chosen prices are implemented at fixed intervals. Average price levels are significantly lower with price-frequency restrictions. With the help of two additional treatments, we rule out the size of strategic risk, and the decreased possibility of communicating through prices, as drivers of lower price levels in the restricted markets. Instead, discrete pricing periods reduce the ability to successfully initiate collusion by making it harder to establish common knowledge of the mutual willingness to collude.
Interaction Frequency and Cooperation in Infinitely Repeated Games, with Ralph-C Bayer (submitted)
Theory predicts that more frequent price interaction strengthens collusion, because faster punishment lowers the discount factor required to sustain it. We test this prediction in an experimental infinitely repeated Bertrand triopoly. We vary the interaction frequency and the induced discount factor independently, which allows us to separate behavioural frequency effects from the theoretical incentive effect. Contrary to theoretical intuition, more frequent price changes reduce collusion levels. An implication of this result is that policies restricting the allowed price-change frequency to deter collusion may backfire, as they not only change incentives but also restrict within-period price competition.
Comparative learnings, with Simon Loertscher
Saving the platypus: automation and public goods provision, with David P. Byrne and Nisvan Erkal
Strategic uncertainty and cooperation in real-time markets, with Ralph-C Bayer and Steffen Huck
Designing a Smart Water Network: Real-Time Controlled Storages Network for Multi-Objective Stormwater Management, with Wei D. Xu, Darren Bos, Stephanie Lavau, Matthew J Burns, Kathryn L Russell, Mia K Tam, Rose Macaulay, Rhys Coleman, Tim D Fletcher
Creating a market for rainwater: a grid of household rainwater tanks